Estimated reading time: 7 minutes
You’ve probably seen settings like Market, Limit, or Day when placing an order with any stock brokers. Well, they are actually part of the order type and time-in-force. But what do order type and time-in-force really mean? And how do they affect your order?
In this blog, we’ll walk you through the most common order type and time-in-force options. Keep in mind that different brokers might use slightly different terminologies but for the purpose of this blog, we will use screenshots from IBKR Mobile (which is btw one of my favorite brokers).
TABLE OF CONTENTS
What is an Order Type?
When you buy or sell a stock, you’re not just telling which stock to trade, but you will also need to tell your stock broker how to do it. That instruction is called an Order type.
Common Options for Order Type
Let’s look at some of the common ones you’ll probably see on most stock brokers.
Market
A market order means you’re buying (or selling) stock immediately at the best available price. If Apple (AAPL) is trading at $201 USD, placing a market buy order will get you shares around that price. The final cost might be slightly different than what you saw, but the order goes through right away.
Limit
A limit order lets you set the exact price you’re willing to buy or sell at. Unlike a market order, which executes immediately, a limit order will only be filled when the stock reaches the price you set, also known as limit price.
Let’s say you set a buy limit order for Apple (AAPL) at $200. If Apple drops to $200 or lower, your order will execute. Conversely, if the price stays above $200, your order won’t go through.
Stop
A stop order is triggered once the stock reaches your trigger price (also called the stop or target price). When this happens, it automatically turns into a market order and executes at the next available price.
For example, if you set a stop price of $200 for Apple (AAPL), once the price hits $200, your order will be placed as a market order.
Stop Limit
A stop-limit order works like a stop order, but instead of becoming a market order when triggered, it turns into a limit order. More price control and yes, you’ll need to set a limit price.
Imagine you place a buy stop-limit order for Apple (AAPL) with a stop price of $200 and a limit price of $201:
- If Apple reaches $200, the order is triggered.
- It will only execute if shares can be bought at $201 or lower.
- If the stock jumps above $201, your order may not be filled.
Stop vs Stop Limit
Both orders are triggered when a stock hits your set price, but the way they execute is different:
| Stop | Stop Limit | |
| Execution | Guarantees | Not Guarantees |
| Order type | Market Order | Limit Order |
What is Time-in-force?
Time-in-force refers to how long an order stays active before it’s executed, expires, or is canceled.
Common Options for Time-in-force
Now that you know what time-in-force means, let’s look at the most common options available on IBKR.
Day Order
A day order stays active only for the current trading day. If it isn’t filled by the market closes, it’s automatically cancelled.
For example, suppose you place a buy order for 10 shares of Apple (AAPL) at $200. If Apple doesn’t reach $200 before the market closes that day, your order is canceled. This is why Day orders are recommended for beginners. Simple, short term and easy to manage.
GTC (Good-Til-Canceled)
A Good-Til-Canceled (GTC) Order stays active until it’s executed, or you cancel it yourself.
For example, say you place a buy order for Apple (AAPL) at $200 as a GTC order. It will stay active in the market until Apple’s price hits $200 and the trade executes, or until you cancel the buy order yourself.
However, most brokers have set an expiration of 30 to 90 days on GTC orders. IBKR cancels GTC orders only if you haven’t logged into your account for 90 days or a corporate action such as a stock split happens.
At The Opening
An at the opening order lets you place a trade that executes right when the market opens. If it can’t be filled at the opening price, it will be automatically canceled.
For example, you may place a buy order for 10 shares of Apple (AAPL) using At the Opening if you expect overnight news or events to influence the stock’s opening price the next day.
Overnight (after post market)
An overnight order works similarly to a Day Order, but it’s only valid during overnight trading sessions. If your order isn’t filled before the pre-market session starts, it will be automatically cancelled.
Suppose you place a buy order for 10 shares of Apple (AAPL) overnight. If the order doesn’t hit your trigger price during the overnight session, the order simply expires.
Investors often use Overnight Orders to react quickly to earnings announcements or global news released after market hours.
Overnight + Day (24H Trading)
Overnight + Day orders extend the overnight order into the next regular trading session (day). This means the order stays active for 24 hours from 20:00 – 03:50 ET (Overnight) and then from 04:00 – 20:00 ET (regular session), with slight adjustments for Daylight Savings Time (DST).
For example, you place a buy order for 10 shares of Apple (AAPL) with a 24-hour duration. If Apple doesn’t hit your trigger price within that 24-hour window, the order expires.
Note: The “Fill outside RTH” is auto-checked by IBKR once you’ve selected “Overnight + Day”.
Overnight vs Overnight + Day (Comparison)
| Overnight | Overnight + Day |
| Active only during overnight session. | Extend overnight session to the next day’s regular market session. |
| If order isn’t filled by the pre-market opens, it gets canceled. | Order active for 24 hours straight. |
Final Thoughts
Now, these are just a few order types and time-in-force that are most commonly used and seen. There are still many other order types that we did not cover here as they are way more advanced and complicated (which we will cover in future). But as a beginner, I would recommend to just stick with these few ones first to get yourself familiarized.
Remember this:
- Order type: Decides how your trade is executed.
- Time-in-force: Decides how long your order stays active.
With these basics in mind, I am sure you’ll have more confidence in placing your next trading. If you’d like to explore further, I recommend checking out IBKR resources, it’s a great place to continue learning.
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